TOLEDO, Ohio, Nov. 11, 2019 /PRNewswire/ -- Welltower Inc. (WELL) today announced that it has entered into a definitive agreement under which Welltower will acquire a 29-property Class-A medical office building portfolio from Hammes Partners ("Hammes") for $787 million.
Separately, Welltower announced an additional gross investment volume of $885 million across four separate outpatient medical transactions which are currently under contract at a blended year one cash cap rate of 5.4%. With these announcements, Welltower has closed or announced over $3.5 billion of outpatient medical acquisitions this year at a blended year one cash cap rate of 5.6%. These acquisitions will contribute 450 properties and over 8 million square feet to the Company's platform, as it continues to expand through accretive off-market acquisitions.
"Today's acquisition announcement exemplifies our unique ability to source and execute on high quality growth opportunities from best-in-class developers and operators," commented Thomas J. DeRosa, Welltower's Chairman and CEO. "These transactions establish Welltower as the largest commercial owner of medical office real estate in the country, with a platform approaching 30 million square feet. We continue to upgrade the quality of our portfolio and align ourselves strategically with leading not-for-profit health systems"
The transaction with Hammes follows the $391 million purchase that Welltower closed in December of 2018. This 1.5 million square foot Class-A portfolio has an average age of 10 years, with 12 years of weighted average lease term and 2.2% average annual rent increases. The transaction is scheduled to close in the fourth quarter of 2019.
The portfolio's assets are concentrated in the New York and Boston MSAs along with other dense population centers in Massachusetts, California, Texas and Maryland. With an economic occupancy of 97%, the portfolio is affiliated with Baylor Scott & White, Providence St. Joseph, Trinity Health, Medstar and other not-for-profit health systems and multi-specialty physician groups. A significant portion of the portfolio has absolute net recoveries and, in combination with the long lease term, will generate significant after capex cash flow growth for Welltower shareholders.
Year-to-Date 2019 Total Investment Activity
In its third quarter earnings release, Welltower announced $3.0 billion in closed year-to-date pro rata acquisition volume and post-quarter gross acquisition activity of $594 million(1) across three transactions. With today's announcement of the Hammes portfolio acquisition for $787 million and the additional $885 million(2) of outpatient medical acquisitions under contract, the Company is pleased to have closed or announced year to date pro rata total investment activity of $5.2 billion(3) at a yield of 5.5%.
A presentation with additional background on these announcements will be accessible on the investor section of Welltower's website.
Forward-Looking Statements and Risk Factors
This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When we use words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "pro forma," "estimate" or similar expressions that do not relate solely to historical matters, we are making forward-looking statements. In particular, these forward-looking statements include, but are not limited to, those relating to our opportunities to acquire, develop or sell properties; our ability to close anticipated acquisitions, investments or dispositions on currently anticipated terms, or within currently anticipated timeframes; the expected performance of our operators/tenants and properties; our expected occupancy rates; our ability to declare and to make distributions to shareholders; our investment and financing opportunities and plans; our continued qualification as a REIT; our ability to access capital markets or other sources of funds; and our ability to meet our earnings guidance. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause our actual results to differ materially from our expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to: the status of the economy; the status of capital markets, including availability and cost of capital; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators'/tenants' difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care and seniors housing industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; our ability to transition or sell properties with profitable results; the failure to make new investments or acquisitions as and when anticipated; natural disasters and other acts of God affecting our properties; our ability to re-lease space at similar rates as vacancies occur; our ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant or joint venture partner bankruptcies or insolvencies; the cooperation of joint venture partners; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future investments or acquisitions; environmental laws affecting our properties; changes in rules or practices governing our financial reporting; the movement of U.S. and foreign currency exchange rates; our ability to maintain our qualification as a REIT; key management personnel recruitment and retention; and other risks described in our reports filed from time to time with the Securities and Exchange Commission. Finally, we undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, or to update the reasons why actual results could differ from those projected in any forward-looking statements.
Welltower Inc. (WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate infrastructure needed to scale innovative care delivery models and improve people's wellness and overall health care experience. Welltower®, a real estate investment trust ("REIT"), owns interests in properties concentrated in major, high-growth markets in the United States, Canada and the United Kingdom, consisting of seniors housing, post-acute communities and outpatient medical properties. More information is available at www.welltower.com.
Hammes Company has been ranked as a leading healthcare facility developer for 21 years by Modern Healthcare's Construction and Design Survey. Hammes has managed in excess of 57 million square feet of complex new, expansion, renovation, replacement, ambulatory care and acute care projects with a value of more than $23 billion for hospitals and health systems nationwide. The company has extensive experience managing the planning, financing, development, construction, leasing and management of non-acute and acute healthcare facilities. Hammes has helped many of the nation's leading healthcare organizations plan, implement and manage facility strategies and solutions for more than a quarter of a century. The company delivers measurable results that help healthcare providers grow while meeting the unique health and wellness needs of their communities. Headquartered in Milwaukee, Wisconsin, Hammes provides services through a network of regional offices strategically located across the United States.
- Investments structured as DownREIT shown at 100%. Pro rata amount is $463 million
- Investments structured as DownREIT shown at 100%. Pro rata amount is $662 million
- Represents 3Q19 YTD pro rata acquisition amount and announced and closed acquisition amounts subsequent to quarter end structured as DownREIT at 100% ownership. Total pro rata investment amount is $4.9 billion
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